Vendors hit again by spendingdrop

ABI Research analysts predict little pick up in telecom equipment sales in the second quarter, as mobile operators continue to hold off buying new equipment.
The firm cites disappointing figures from Ericsson, and profit warnings from Alcatel-Lucent and ZTE as evidence there will be little in 2Q figures to lift spirits after a tough first quarter, when total industry revenues slipped 17% sequentially to $11.4 billion (€9.3 billion).
“Ericsson’s second quarter results…showed just a 9% increase in sales from the first quarter. Preliminary results…from Alcatel-Lucent and ZTE also predict slight increases in revenues, but fall far short of expectations,” Jim Eller, principal analyst for wireless infrastructure at ABI says.
Sweden-headquartered Ericsson last week revealed a 63% year-on-year drop in net income to 1.2 billion Krona (€142 million) in 2Q12, on marginal sales growth of 1%. Alcatel-Lucent, meanwhile, predicted a €40 million operating loss for 2Q12 due to a slower than expected market recovery, and ZTE that net profit will decline by 60% to 80% year-on-year.
Aditya Kaul, ABI’s practice director for mobile networks, believes the lower revenues are a direct result of carriers failing to invest in infrastructure due to global economic uncertainty.
The outlook is tough for equipment makers, with Kaul predicting weak spending on network kit “for at least two more quarters.”